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Central American University - UCA  
  Number 458 | Agosto 2019
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Nicaragua

Has there ever been rural development in Nicaragua?

This Central American University economics professor reflects on the different development models there have been in our country, emphasizing the rural sector’s age-old exclusion from national development.

Luis Gustavo Murillo Orozco

When we were nomads, our entire lives were in contact with nature. We human beings would interact permanently with the earth, waters, trees, their fruits… Everything changed when we became sedentary and populations began to concentrate in villages and towns… Soon cities were formed. Since then, the collective self-image of “territory” was split into two spheres. The urban sphere was a space for progress and the “countryside”—a word that has had a derogatory connotation—was synonymous with backwardness and poverty.

Rural sectors produce,
urban sectors benefit


This idea of territory, divided into urban and rural, served as a base for different development approaches and models until the end of the 20th century when, with globalization, the borders between urban and rural began to fade and “territory” appeared as a single space with the capacity for integrated development. Knowing that society’s success depends on everything in its territory being managed as a single space for development, the countryside was no longer seen as where the primary sector engages in its activities (agriculture, livestock-raising, fishing, forestry).

In many developing countries like ours, however, the rural sector continues to be systematically excluded from development. Throughout our history, no matter what period or what model was promoted, the countryside has been shunted aside and the rural sectors have been the Cinderella. The countryside has always been the base for productive systems that generate wealth and foreign currency, but the benefits have never stayed there; they’ve always been transferred to big capital, which dominates the economy and the political class.

Rural sectors suffer
multidimensional violence


The rural sectors have also always suffered violence. If the nucleus of every society is the family, the first violence is seen precisely in the rural family, which suffers problems of unemployment, minimum income and a lack of quality health care and education. This is why rural families’ strategy to alleviate poverty has historically been to increase their labor force: have more children.

There is also violence in the distribution of income. If a pound of cheese in any urban market costs 50 córdobas, a farmer in the rural areas is paid no more than 25. This happens because in our country the productive chains are unorganized and there’s a lack of public policies and economic infrastructure. This always benefits those who are the intermediaries of rural products.

There’s also labor violence because what exists in the countryside is an informal market: there are no work contracts or schedules, and no social security. This excludes farm workers from the right to a pension in their elderly years.

There’s also violence in the political field, because peasants only become important to politicians during election periods. And there’s moral violence, too, with all of society responsible for the scorn towards men and women from the countryside who come to work in the city and are not well-dressed or well-spoken… We tend to reject them.

With no fear of being mistaken, we can state that the rural sectors, despite being those who guarantee food for the cities, suffer multidimensional violence.

The agro-export model


Let’s take a quick look at the different economic development models there have been in Nicaragua. Almost all have provoked aggression and violence toward the rural sector.

Between Central America’s Independence in 1821 and the 1950s and 60s what we’ve had in our country is an agro-export model inherited from the colonial economy. With this model, rural sectors produce wealth in the countryside, but it’s in the urban areas where political decisions are made and strategies are developed about what to produce and what to do with the wealth. Moreover, our production goes into the international market, where policy decisions that affect us are made.

With the agro-export model—which is still in place—Nicaragua made an effort to become economically modern. This meant inserting the country into international commercial circuits. We started with coffee, cattle and bananas… to export unroasted coffee, beef and bananas.

The first “agrarian reform” was imposed by the Conservatives in 1856, after the National War against William Walker, It took the ancestral lands from the indigenous communities that planted for their subsistence. The purpose was to grow products for agro-export: coffee, mostly in Matagalpa, Jinotega and Carazo; cattle, in the entire central area, extending the agricultural frontier; and bananas and plantains in the hands of transnationals such as United Fruit Company or Chiquita Brand, in the western and Caribbean parts of the country.

This process didn’t only take the lands away from indigenous communities; it also overexploited cheap peasant labor to ensure extraordinary benefits from those crops. Both Conservatives and Liberals took advantage of the simplicity of the peasant population to also hire them as “cannon fodder” in their continuous inter-party wars.

During this long period the “countryside” was a source of easy benefits for the political class that would extract natural resources, get cheap labor and during certain moments, play on political loyalties.

The spread of the
agro-export model


The National Development Bank, created by the Somoza government, operated in Nicaragua between the 1940s and 1960s, specializing in the development of the productive rural sectors. This bank had an institutional scheme and an integrated logic for giving credit, because it didn’t just give out loans then think no more about the loan until the farmer had paid of both the capital and the interest, as banks typically do. Instead bit established a methodology of follow-up and technical assistance that made these farmers successful. That’s why during those two decades Nicaragua was known as “Central America’s granary,” feeding our country and the rest of the region.

The agro-export economy expanded during the 1950s and 1960s with cotton. With the Korean war and the separation of the two Koreas, that country, which had been the main cotton producer for the US textile industry, abandoned its production and the cotton “boom” started in Latin America and in Nicaragua.
It was extensive production which gave way to the second “agrarian reform”: the land of peasant basic grains growers in León and Chinandega were expropriated, and the uprooted farmers themselves were relocated to the central area of the country, mainly Nueva Guinea. With that move, the rural population experienced two violent processes: their land was taken from them and they also lost their possibility of development because they were sent to far and inhospitable lands, where there were no basic services. Several generations suffered a delay in their human development.

The industrialization model


During this period a new economic model gained predominance in Latin America, “Import Substitution Industrialization.” It was based on a theory by the Economic Commission for Latin America and the Caribbean (ECLAC), with Raúl Prebisch at the head, that strongly influenced many of the decisions made by politicians on our continent over the years and was also adopted by the international financing institutions such as the World Bank.

Prebisch saw the world as divided into center and periphery. The developed and industrialized countries of the center took advantage of the natural resources of the peripheral countries, called developing countries, which only produced agricultural or mining products and exported them with no processing to add value. With the income from those exports the country had to import all the manufactured products it needed either for domestic consumption or as productive inputs, with ever worsening terms of trade. Prebisch proposed to change the productive structures of Latin America and start industrial manufacturing production, substituting those imports.

Several industries sprouted up in Nicaragua, but were not very successful, like Penwalt, which produced chemical products, and the Ramos and Rarpe pharmaceutical laboratories. We even built a vehicle, which was called “El Pinolero,” ugly as hell, but we managed to produce it. Prebsich’s model coincided with the creation of the Common Central American Market (MCCA) to integrate the economies of the region, in which we were mainly assigned plastic products, particularly bags.

With this model, resources were destined to the cities to start up industries and the rural sector’s activities lost their value. This caused significant rural-urban migration. Entire populations from rural areas of Nicaragua began to move to the cities with the hope of improving their living conditions, but in the city they lost their identities and values. They earned very little or more likely would lose.

By the time this model ran out, many people from the countryside had become impoverished in the cities. The model failed quickly for several reasons, among them the lack of experience in industrial production and the worsening of the political and military crisis in all of Latin America, including Central America. This led to what I call the “non-economic model” in the 1980s due to the exacerbation of the political component in all the countries. Many economists call it “the lost decade.”

The lost decade


The triumph of the Sandinista Popular Revolution in 1979 in Nicaragua was at first thought to be the base for profound change in both the Somoza political system and its economic development model. But, the change in the political system was not achieved, nor was the change in the economic model, which was intended to move from being a capitalist economy to being a planned socialist economy.

The countryside and the rural sectors were the ones to suffer the most due to the conflicts and the physical, political and ideological violence caused by the changes, which soon led to a civil war bringing enormous destruction to their lives and economic infrastructure.

An incomplete agrarian reform


The revolution made an attempt at a third agrarian reform. With it, the new political system tried to break away from one of the economy’s endemic evils: an unfair and excessive concentration of unproductive land in the hands of landowners close to the Somoza regime.

The agrarian reform of the 1980s ended up incomplete. A true reform requires three stages: expropriation from the original owners, an assignment decree for those who benefit, and finally, the land’s registration in the property registry office by the new owners.

In this case the expropriated land—not always done fairly—was assigned to beneficiaries organized in cooperatives but the land in most cases was not titled to either the cooperative in general or its members individually. The government didn’t want to lose its mechanism of clientelist power.

No trust in the cooperative system


The cooperative system, an excellent mechanism of collective action to strengthen the economic efforts of small farmers especially in rural areas, was lost in the 1980s because of its politicization.

The footprint this unsuccessful initiative left on our society is deep. There are many very successful experiences of cooperatives in the world—a very close one with more than 70 years of experience in the Dos Pinos milk producers’ cooperative in Alajuela, Costa Rica. But in Nicaragua today, when a farmer is offeed a proposal to form a cooperative the reaction is largely one of mistrust.

Insecurity in property ownership


The agrarian reform process of the 1980s was also incomplete because the property assigned to the new owners was hardly ever registered in the registry office. By violating the right to property, the peasant sector’s right to develop by making an asset as important as land produce was also violated.

Every person has the hope of owning a piece of land on which to live. In the countryside, land is an even more important asset than in the cities because it serves as collateral to apply for loans and is a space for family and community development.

The problem of insecurity in land ownership started in the 1980s with decisions made by the Sandinista government but continued during the government Violeta Chamorro, which issued bonds to the tune of almost US$700 million to compensate those whose land had been confiscated in the previous decade. President Chamorro also gave temporary titles to those demobilized from the war, and the governments of both Aleman and Bolaños continued the practice of giving temporary titles, in these two cases simply to their supporters.

And today, after it was thought that the Constitution had forever banned confiscations, de facto confiscations with forceful invasions of productive lands returned with the crisis that began in April 2018. The latest figure released by the Nicaraguan Agricultural Producers’ Union (UPANIC) is 4,900 hectares of land still being held by land invaders.

Who’s going to pay compensation to the owners of these invaded lands? It’s very probable that compensations will come out of the national budget, which comes from our taxes. Recovering the productivity of those occupied lands will be a problem in the future. Land tenure insecurity is a serious problem that has not been resolved and affects the national economy.

The neoliberal model


Another economic model, the neoliberal one, was practiced from 1990 to 2006. It was applied by three governments: the first was the coalition government of Violate Chamorro and other two were Liberal governments, but with Presidents with different political ideologies. Arnoldo Alemán, a Liberal, followed by Enrique Bolaños, a Conservative.

That model tried to transfer control of the economy from the State to the market. Many basic services were privatized: including energy, telecommunications, health care and education.

Structural adjustment policies were promoted and applied by the International Monetary Fund and the World Bank. There were two structural adjustment programs, and also a program of foreign debt pardon or relief within the Highly Indebted Poor Countries Initiative (HIPC). The structural adjustments had high social costs that mainly punished the most vulnerable sectors of society in both the cities and the rural areas.

The structural adjustments improved the macroeconomy: it stopped inflation, which in 1989 had exceeded 33,000%, and stabilized the national currency, which had reached a devaluation level of 19,000 córdobas to the dollar. It also generated investments for urban infrastructure. But all these macroeconomic achievements came at the cost of political and economic exclusion. Migration was no longer from the countryside to the city, but from both the city and countryside to other countries. It’s estimated that more than 45,000 Nicaraguans emigrated due to the structural adjustments.

“ Bonex” for nontraditional exports


During the period of the three neoliberal governments there was what I call development sub-models.

Some neoliberal economists identified Nicaragua’s problem during the Chamorro government as having a very limited export base: mainly just a few traditional products. They then proposed growing “nontraditional” products: melons, giant granadillas, passion fruit, pitahaya (known abroad as dragon fruit)….

Copying what was done in Costa Rica, the government encouraged the production of these nontraditional products by giving farmers Export Development Bonds, the famous “Bonex.” For example, farmers would go from growing coffee to cultivating melons, but since they had no experience or enough capital to make the transfer, they were given bonds to aid them. When presented, these pieces of paper would the tax reductions for everything needed to invest in for the change.

Small farmers live day by day, “hand to mouth,” but these bonds weren’t discount coupons; they were only papers to reduce taxes. As a result, when Minister of the Presidency Antonio Lacayo promoted the creation of the Nicaraguan Stock Exchange in 1994, most small farmers sold their bonds because they needed cash. So at the end of the day, those who took advantage of the tax pardon were the large businesses that ran the Stock Exchange.

Subsidies for whom?
The rural sector lost and, like always, big money won. Something similar happened in 1998, when international coffee prices plummeted from US$150 to US$50 a hundredweight.

To alleviate the crisis, Alemán’s government offered coffee growers a subsidy of US$30 per 100-pound sack of green coffee. Those most affected by the crisis were the small coffee farmers, who sell their freshly-picked coffee cherries, as the fruit is called, to the processing mills, where they remove the skin and pulp, revealing the green coffee beans.

So once again, the subsidy didn’t buffer the problem for the small rural coffer growers, who are the majority. Those who benefited from it were the big guys, CISAS and Atlántida. which not only produce the green coffee but also produce politicians, dominating politics and the national economy.

The nontraditional agricultural products model didn’t have the expected success. Today, more than 85% of Nicaragua’s exports rest on 17 products. That’s how limited our exportation matrix is. And more than 70% of those 17 products is sold raw in the international market, with very little added value.

The “clusters” sub-model


During the Bolaños government another sub-model, called “clusters,” was introduced into the National Development Plan with advice from Michael Porter, the economic policies guru. Porter had advised several countries and written four books about the idea. In them he formulated that the only way to develop Central American countries was to concentrate productive activities in a given area, turning it into a “cluster”, a conglomerate of similar or related productive activities.

Since the 1990s, every government has invited about 25 of us economists to ask our opinion on the National Development Plan. They never did what we recommended, but they would listen to us. I remember that when they consulted us about the “clusters” project we told them it was fine for more developed countries, with industrial policies, well-developed production chains and highly trained human capital, but in Nicaragua it would be better to start with pre-clusters or incipient value chains. In the end, this project never happened and the value chains continued unstructured.

The neoliberal model lacked public policies promoting development and the two proposed sub-models lacked public policies to promote lasting technological changes in the productive systems.

Micro-finance institutions


Favorable credit for rural farmers was also lacking and the National Development Bank (BANADES) even disappeared. The nationalizing of the banks in the 1980s was followed by their denationalizing in the 1990s.
In the neoliberal models the lack of credit was covered by what were initially called “little banks” that would finance production for those who couldn’t get credit in the commercial banks. The little banks are what we now know as micro-financing institutions (MFIs).

Years ago I studied six MFI experiences. In all of them I saw that even though the initial goal was to support the production of those who needed aid the most, the highly personalized and detailed transaction costs and follow-up to finance small farmers increases the loans’ interest rates up to 30-35%. This ends up being hard to support for any economic sector.

During those years many farmers lost their land due to the impossibility of paying off their debts. An unofficial figure points to close to 125,000 properties of between 3 and 28 hectares lost, indicating that those being expropriated weren’t big farmers but small and medium ones who lived off their land’s production. During those neoliberal years a “counter agrarian reform” process started and hasn’t stopped since.

Socialism or more neoliberalism?


The FSLN came back to power in 2007. Nominally it presented itself as a government of the Left within what is called 21st-century Socialism, but in reality it soon became apparent that it was even more neoliberal than the previous neoliberal governments, harming the rural sectors with its policies and associating from the beginning with large private businesses represented in the unions and chambers grouped within the Superior Council of Private Enterprise (COSEP).

The Ortega government is a hodgepodge of elements of populist policies with “social” characteristics and a segregationist economic policy that punishes the rural sector more than the urban.

Our economy had been growing when the FSLN returned to government. It had taken us 28 years to recover from the last economic depression, caused largely by the war during the 1980s.

The four pillars for recovery


Since 1990 efforts were made to reactivate that fundamental asset of any economic system, which is “trust.” Over the years it was indeed being recovered and because of that the economy was slowly improving, always sustained by four pillars, all of them dependent on external factors.

One pillar was our exports to the international market. Another was international aid, contributing over US$500 million annually, which covered part of our domestic deficits. A third pillar, also based on trust, was foreign direct investment. During the best of times we reached almost US$1.1 billion a year in investments, which represents 10% of the gross domestic product (GDP). The fourth pillar, also dependent on the exterior—and, I should add, the only one that has grown during the current crisis—is family remittances.

So our economy was growing until April 2018 when we entered a political and social crisis from which we haven’t yet been able to get out.

The economy’s behavior before the crisis


Before referring to the current crisis, I want to preface it with a premise: before April 2018 the economy’s growth was positive—an average 4.5-5.2% GDP growth for 11 years. But it was a spurious growth: superficial, apparent and with very little development.

The economy was growing because of the “tailwinds” from the world financial crisis of 2007-2008. The mortgage and financial crisis caused investors to prefer investing in raw materials futures rather than in securities. Since that’s what Nicaragua produces, the international prices of our exports began to increase. But it was a temporary episode. When the world crisis ended, investors went back to speculating in the financial markets and the prices of our products started to decrease.

The economy also grew because of the traditional international cooperation and especially the multi-million dollar Venezuelan oil cooperation, which was very favorable for the country… or at least for those who took advantage of it. Right here I want to point out a pending problem of our economy in crisis. We have an enormous debt with Venezuela, which it was always argued was a private debt. But sooner or later, the Venezuelan government is going to change and they’ll send us the bill for that debt. Will politicians recognize it as a public debt?

In our very economically favorable scenario up until April 2018, the government made a serious mistake, the same one it had made in the 1980s. It managed politics in a dictatorial way, imposing a political scheme that included party adherents and essentially excluded the rest of society. In spite of having reached power only as a product of a pact between two caudillos, without a majority of votes, the Ortega government started to shape a political system that placed all of society’s interests at the service of its own interests, violating human rights, economic rights, political rights…

The Venezuelan government’s social, political and financial crisis was the precursor to our current crisis. It is estimated that the ALBA project generated close to US$9 billion for Nicaragua that did not pass through the national budget and for which there was little accountability. Today the government is trying to launder that money by incorporating it into the formal economy, making the State responsible for the part of it that is debt.

Pressure begins to build


With the structural crisis of Venezuela, the two most specific detonators that caused the pressure cooker to explode were the forest fire in the Indio-Maíz nature reserve, which the government did nothing or very little to fight, and the social security reforms.

When Daniel Ortega took office again in January 2007, the 25 economists who were always invited to give our opinion were again called in. That year we told the government that since the economy was growing, it was the best time for a tax reform. We suggested that they review the exemptions, exonerations and subsidies to certain sectors of the economy, which represented US$1.6 billion.

We didn’t recommend eliminating them all, but reviewing them to see which ones were justified and which were not. However, the government wanted to maintain solid relations with large private businesses, which benefit most from those fiscal privileges even while only representing 19% of the country’s businesses. Naturally, the government didn’t do as we suggested.

In 2012, at the beginning of the government’s second term, we were called in again, for the last time. That year we pointed out the crisis in Social Security. We were concerned with the bad management of the institution’s investment resources, most of them dedicated to long-term investments—housing development, land, vertical buildings—when what was recommended were short-term investments capable of obtaining resources to finance Social Security’s expenses.

The Social Security crisis


We were also concerned about the excessive administrative expenses in the Nicaraguan f Social Security Institute (INSS). During the previous Bolaños government, the administrative expenses in INSS were 4.5% of its budget and the institution had fewer than 2,500 employees, with only 30% earning a monthly salary equivalent to more than US$833. By 2011 administration costs were already at 13%, with the number of employees and the salary hikes growing non-stop: today there are more than twice as many employees and almost 60% earn a monthly salary of more thanUS$610.

And we were concerned that while the law said the State guarantees a pension for those who have paid contributions for at least 750 weeks and the current government had 350,000 affiliates in this category, it had also added almost a million more by creating the category of “reduced pensions,” an optional coverage directed towards the huge segment of self-employed workers and those in informal jobs, as well asmany other pensions Social Security was made to assume in theory, although in practice its budget would have to be subsidized by the national budget.

A disheartening
economic panorama


All this has been pointed out in one form or another since 2012. But the government paid no mind. And to top it off, in January 2019, still in the middle of the crisis that began in April 2018, it decided to apply more drastic tax reforms than the ones we had suggested and equally harsh social security reforms, both in a totally inappropriate moment.

When an economy is in recession, as was the Nicaraguan economy at the beginning of 2019, taxes must be reduced and not the other way around. And it should have increased the social security contribution fee in 2012, when the economy was generating more jobs, not in the middle of the crisis with its dramatic results: massive unemployment, businesses closing, an increase in informal jobs and other serious economic and social problems.

Today, Nicaragua’s economic panorama is disheartening. In 2009, the country had entered a process of deceleration in which it continued growing positively, but at a slower rate. After April 2018, the deceleration increased rapidly, and since October the country has fallen into what is known as a technical recession, for having gone through two consecutive trimesters with a negative performance of the main economic indicators.

The IMF has said what many national economists have been saying: if a political agreement is not reached through dialogue and consensus this year, with its predicted 5% drop in the GDP, in 2020 we will possibly enter into a depression.

The economic crisis has been drastic and speedy since April 2018. Because of the repression and the stubbornness of the new tyranny, we’ve gone from being the Latin American economy in third place for the greatest economic growth, behind Panama and the Dominican Republic, to becoming the one in third place for the greatest economic problems, only behind Haiti and Venezuela.

Financial violence for the rural sectors


In the rural scene, the crisis has caused a lot of violence. Before April 2018, specifically since 2013, this government was mainly violating the rural sectors with the concession to build the Interoceanic Canal across the territory where the most peasant communities live, displacing them from their family homes and farms. That is why they began to rise up.

Since the privatization of the banking system during the 1990s, it has been easier to get a loan to buy a car than to finance a hectare to produce food. Today the very limited or total lack of bank credit available for the productive sector as a result of the crisis the banks are going through has caused financial violence and in the countryside and executive trials, frequently lightning ones, are being held to dispossess rural farmers for what were originally relatively small debts, debts that have grown due to arrears interest or for other reasons, forcing them to migrate to other countries, where they end up in poverty.

Big money is taking advantage of these situations with rentier strategies such as the pre-financing formula for crops that the LAFISE-Bancentro financial group is implementing, surely obtaining significant profits, althoujgh there are no precise figures.

The environmental cost
of the economic models


Big business’ accumulation processes in all the economic models we’ve had have left a particularly large debt for all of Nicaragua: the environmental cost.

All big agricultural producers, no matter which model is applied, have overexploited underground water and have never paid for the water they use to irrigate the export products that have provided them so much profit. They don’t give the water investment back to the country and don’t replace the trees they cut down.
The mining concessions and the African palm and other extensive mono-cropping are pillaging the natural resources and negatively affecting the environment.

As of today, Nicaragua has signed 14 Trade Treaties and Free Trade Association agreements with several countries and groups of countries, the latest being the United Kingdom. They all have the same starting point: increase the export quota of cattle towards the international market. What does this mean, without modifying the extensive cattle raising model we are still using? It means destroying forests to expand pastures, extending the agricultural frontier even more.

Small farmers without
water for production


Regarding to the issue of irresponsible use of water by the big agro-exporting businesses, I want to describe an experience. When the Economics Department of the UCA would do field trips—now suspended due to the crisis—we got pretty familiar with the experience of the Xochitl-Acatl Women’s Center in Malpaisillo, in the municipality of Larreynaga, department of León. It’s an experience that has incorporated gender equality into all of its development projects and its approach, not on paper but real, is of Local Economic Development with environmental sustainability in all of the productive systems it promotes.

The women leaders from this experience made an effort to overcome a structural problem in this dry area of the country that caused a lack of water for production. They created an infrastructure of wells to irrigate their plots. After the investment was made and the women were working and had recovered the land’s fertility, the Pantaleon Group, with Guatemalan capital, which owns the Monte Rosa sugar refinery, bought an area of over 420 hectares to plant sugar cane. It then designed a water extraction system for spray irrigation that virtually dried up all of the women’s wells.

There are wide areas in several departments of Nicaragua where small farmers no longer have water for their production. Obviously the viability of any economic recovery in the country and in the countryside depends not only on land conservation but also having water to make it produce.

In another study we did in Villa El Carmen, one of the effects we found was that the Montelimar sugar refinery had been leasing land to small farmers for several years. They were using the land to grow sugar cane to sell to the refinery and were no longer growing any grains, essential to Nicaraguans’ basic diet. Therefore, if this national economic model is going to continue being that of extensively planted crops for agro-export, like African palm, sugar cane and others, not only is the recovery of our national economy at stake, but so is the entire population’s food and nutritional security.

A need for a local
development model


I believe we urgently need a social and ecological development model in Nicaragua that focuses on local development, supported by inclusive and sustainable public policies. But it will happen only when people acquire knowledge and awareness.

I’m a true believer in local economic development. In Latin America, Chile is known as an economic “miracle,” a reputation achieved through public policies and the use of its endogenous productive potential. When the criminal dictator Pinochet came to power, a high percentage of the Chilean economy depended on copper exports. His government did one thing well: it broke away from that dependency. To achieve that it implemented two positive things, w accompanied by educational, productive and commercial public policies. They made a list of all the products the world was demanding and researched them. They also listed the endogenous potential that existed in the different Chilean territories to produce those products and many others and researched them. With that knowledge, Chile became one of the first countries to successfully apply the Nontraditional Agricultural Products model and began to export salmon, melon, waxed cassava… diversifying the productive areas, the farmers and their markets.

Something like this could be accomplished with inclusive development in any country, but it requires public policies based on local development, training and support for small and medium businesses.

Another interesting case is Costa Rica, with an economy based heavily on tourism, not just the tourism of big hotel chains but also small providers of hotel services. In its National Development Plan, also based on the logic of promoting ecological tourism, Costa Rica identified retired people from developed countries as potential investors and through a fiscal policy encouraged them to invest in small hostels of four to five rooms, pardoning 30-35% of the taxes for the investment they would make. That’s how they managed to develop an economy based on micro, small and medium tourism businesses.

How is it possible that Nicaragua, with 50,000 square miles of nature, has an income of IS$500 million a year in tourism—or did before the crisis—while Costa Rica, with 20,000 square miles, has an income of US$3.5 billion dollars each year?

Another model of development is needed in Nicaragua, one that prioritizes the 81% of micro, small and medium businesses until they achieve a more protagonist role rather than focusing on the 19% of big businesses that have historically dominated politics and the national economy. We must forget about structural international cooperation because it’s not coming back. We have to look for self-sustaining native alternatives.

Continuous sustained investment
in the formation of our people


Reviewing the different development models we have practiced and that haven’t worked, and seeing where we are today, I think what has failed, what has been lacking is continuous and sustained investment in the formation of our human resources. Continuous and sustained.

Again we have the example of our neighbor, Costa Rica. During the 1950s it was just as poor as Nicaragua or poorer. What did Costa Ricans do to become what they are today? They invested in human capital and ensured that the whole population went from five years of schooling to eleven, an effort that took 40 years. They also got all the economic sectors to agree by consensus on an authentic National Development Plan that prioritized education and the diversification of the productive matrix with nontraditional products and diversified markets.

The result is that, unlike the other Central American countries, Costa Rica doesn’t have a high level of dependence on the US market because it sells to very different markets. And finally, all the sectors agreed to eliminate the army and develop a real culture of democratic and institutional policy.

What should we do? Invest in human capital and in socially and environmentally sustainable development. Improve education aiming for holistic education, where children are taught what they need to know in each territory. Development is always accomplished with the people and the only way to develop ourselves is with educated people. We need to educate them with quality education from an early age and for the rest of their lives.

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